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Eureka: Fixing unemployment
by Jay Gutman
2017-02-11 12:27:49
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Unemployment can be structural or cyclical. Cyclical unemployment usually means the area is experiencing a tough economic cycle and is about to bounce back. Structural unemployment means the structure of the economy has the jobs located in one place when the population is located in another place for example.

une_400How do you fix cyclical unemployment? Up until now, most countries injected funds into employment-creating projects and people naturally found employment. In this day and age, I think it’s important rather than just blindly injecting funds to the economy to actually make a study of the supply and demand of production and employment skills. That is to study what the available skillset is, and what the production abilities for the economy are. It would be a waste of time to create jobs in areas where people don’t have the skills, and a waste of time to create production units that few workers can control and operate.

As for structural unemployment, the main reasons are either the concentration of wealth by a few oligarchs, problems with transportation or employment poles located far from the areas where the population lives. In areas with heavy congestions for example, it is important to create employment poles within secluded areas so people don’t have to drive far, adding to the congestion. As to areas far off where the mines and oil fields are, employment could benefit by building towns in the area, although prudence can be important as once the oil or mine fields run dry you get the kind of problems you get in rust belts.

As for economies where there is a great concentration of wealth by the few oligarchs, the oligarchs would benefit from helping people create jobs in areas where they don’t necessarily compete with the oligarchs. Conglomerates could also limit their areas of production so independent companies could find niches in those areas.

Another form of unemployment is one where there once was a high demand but the demand today for such skills is lackluster. I have translators, journalists and teachers in mind. The oversupply of workforce in those areas means that the skillset needs to be transferred to other skills where hiring is taking place, for example advertising or marketing or other skills.

Either way, when fixing unemployment, there needs to be an analysis of the supply and demand of skills to be able to match the two. Otherwise money can be injected in technologies which don’t have the skillset needed in the population to operate such technologies.

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